Category: Chapter 7 Bankruptcy

Mankato, MN has experienced a lot of big changes this year, including some major flooding that has altered the lives of many people across the city. Along with unprecedented changes in infrastructure, some Mankato residents have found themselves struggling in the aftermath of the floods. Behm Law Group is here to guide you through the entire bankruptcy process if the flooding has affected your financial future and you’re considering Chapter 7 bankruptcy, also known as straight bankruptcy, as a solution.

Unexpected Financial Difficulties After Natural Disasters

 While bankruptcy may not have been the plan for many business owners and Mankato residents, financial upheavals tend to follow natural disasters. Though for some, the floods were merely a footnote in an already tumultuous year, other residents and business owners hit their final financial straw during and after the event. Most people don’t even want to consider bankruptcy of any type in their lifetime, but in reality, Chapter 7 bankruptcy, also known as straight bankruptcy, can be a way to regain your financial freedom following a disaster.

Why Choose Chapter 7 Bankruptcy?

Understanding which type of bankruptcy to choose when you’re dealing with the aftermath of a natural disaster can be beyond stressful. Your legal team at Behm Law Group can assist you in making the right choice, but for many, straight bankruptcy offers a comprehensive solution to eliminate bankruptcy in a single step.

By filing a chapter 7 bankruptcy, an individual can regain control over their finances. Straight bankruptcy requires you and your law team to compile and analyze records concerning your current financial status and determine/list all the assets you own and all the debts you owe. You will then work with your lawyer to finalize your Chapter 7 bankruptcy petition, safely go through the process, get rid of the debts that are dragging you down and restructure your financial situation.

Natural disasters, such as major floods, are difficult, but the financial difficulties that may follow a disaster are still possible to overcome. Mankato, MN residents interested in pursuing straight bankruptcy can contact Behm Law Group at (507) 387-7200, send us an email, or visit our website today. Our team can help you navigate Chapter 7 bankruptcy and begin to make a new financial plan going forward.

After finalizing a bankruptcy, it can be difficult to envision your new financial future. Bankruptcy is a stressful and foreign process to most, and after the last of the documents has been signed, many St. Peter, MN residents have probably asked themselves, “Now what?” The good news is that rebuilding after bankruptcy is not only possible; it’s also an excellent time to really take control of your financial potential. At Behm Law Group, we recommend that all individuals and businesses completing Chapter 7 bankruptcy follow these steps to stay on top of their new financial plan.

Prioritize Consistency

This is true, whether it means making consistent payments or maintaining a steady position. Following Chapter 7 bankruptcy, the more consistent and moderate you can keep your spending behavior, the better. Be sure to make your payments to creditors on time, stay on top of any credit payments, and try to avoid large or risky purchases. In fact, being financially boring for a while is a great choice. Pay all of your fees on time, give your credit time to recover, and keep your income as steady as possible.

Never Underestimate the Power of a Budget

Even if you had a budget before your Chapter 7 bankruptcy, it’s time to make a new one with your new financial future in mind. Rebuilding after bankruptcy requires a lot of reflection and honesty, so you need to make a budget that accounts for your new payments, your outstanding debt, and some savings wherever possible. This doesn’t necessarily mean cutting out everything but the essentials, but it should be realistic. Chapter 7 bankruptcy is a chance to make a permanent and lasting financial change, and a strict, effective budget is a great way to start your recovery.

Chapter 7 Bankruptcy and Documentation

If you’re coming out of a Chapter 7 bankruptcy, then you know the power of paperwork. Rebuilding after bankruptcy has a lot in common with the bankruptcy process itself: keep a record of any purchases, keep proof of payment for your debts, and make an effort to get your financial records in order. If you struggled with the paperwork aspect of your bankruptcy from the start, the immediate completion of the bankruptcy process is the ideal time to establish a filing system. Not only does this aid in budget creation, but it also safeguards you against potential disputes or loss of payments or purchases.

If you or a loved one are in need of Chapter 7 bankruptcy information and support in St. Peter, MN, Behm Lawn Group is here to assist. For information on filing and starting the bankruptcy process, you can contact us today at (507) 387-7200, send us an email, or visit our website. Rebuilding after bankruptcy can be daunting, but with the right legal team on your side, you can rest assured you’re getting the

In today’s overly simplified media portrayals, the bankruptcy process is frequently depicted inaccurately. Losing absolutely everything, including your car, home, business, and all your assets, is a flawed interpretation. In the real world, when you find yourself faced with bankruptcy, it’s understandable to be anxious about what may be in store for you and your family. While it is true that bankruptcy can involve the liquidation of some of your assets, things that are considered “necessities of modern life” are exempt from bankruptcy. Behm Law Group works closely with New Ulm, MN individuals to create a Chapter 7 bankruptcy case that helps them manage their debt, identify items that are exempt from liquidation, and reclaim their financial stability.

How does Chapter 7 bankruptcy work?

Debt discharge is the main focus of bankruptcy, also referred to as straight bankruptcy or liquidation bankruptcy. It creates a debt repayment or liquidation plan that lets your life continue while simultaneously satisfying your debtors. If the word “liquidation” makes you nervous, it’s important to remember that it’s extremely rare for individual filers to lose their property during this process, as long as the proper forms are correctly filed.

What protections exist for your property?

Despite the stereotypes, Chapter 7 bankruptcy is not a free-for-all on your belongings. State and federal exemptions exist to ensure that you will not be left with nothing after bankruptcy, and in no situation will you be pulled into a courtroom and asked to empty your pockets. Bankruptcy of all types, including Chapter 7 bankruptcy, is a legal process with rules, regulations, and exemptions. Determining which of your assets are exempt or nonexempt is, in part, the role of your bankruptcy lawyer.

How can you safely navigate the bankruptcy process?

At Behm Law Group, our goal is to assist you throughout your bankruptcy and ensure that your debt discharge is fair and manageable. Straight bankruptcy is a route towards a debt-free future, but you don’t have to navigate it alone. If you’re in New Ulm, MN and are looking for comprehensive Chapter 7 bankruptcy support, we can help.

New Ulm, MN residents aiming to file Chapter 7 bankruptcy can contact Behm Law Group today at (507) 387-7200, by email, or by visiting our website to find out more.

It’s a common perception that bankruptcy is “rock bottom” for an individual’s finances. But the reality is much more nuanced than that. For some, choosing Chapter 7 bankruptcy is more akin to a fresh start. In many ways, the period that comes after filing for bankruptcy is even more significant than the days leading up to it. At Behm Law Group, our bankruptcy lawyers can help you come out of bankruptcy looking towards a brighter future without financial stress.  With our support, a fresh start in Owatonna, MN could be your new reality.

How Chapter 7 Bankruptcy Allows for a Fresh Start

In the context of Chapter 7 bankruptcy, a fresh start means that you have an opportunity to rewrite your financial identity. This might be in the form of small efforts to rebuild your credit and change your spending habits to better suit your income, or it could entail large life changes like liquidating land or releasing a failing business to get a handle on your debts. However you’ve chosen to mediate your debts, chapter 7 bankruptcy is an opportunity to change the trajectory of your financial future without old weight lingering on your shoulders.

Bankruptcy Attorneys are Experts with the Paperwork

 To successfully file a chapter 7 bankruptcy, you need to provide your lawyer with documentation that verifies your debts and substantiates your ownership of your various assets.  In Chapter 7 bankruptcy, there are exemption laws that allow you to retain assets necessary to reorganize your life and financial circumstances.  While the exemption allowances are very generous, they have limits.  Sometimes, non-exempt property that exceeds the limits of the applicable bankruptcy exemptions must be turned over to the chapter 7 trustee administering the case.  The trustee sells the non-exempt assets and distributes the sale proceeds among one’s creditors.  While the bankruptcy process can be nuanced and scary, the good news is that you don’t have to navigate the process on your own.  Behm Law Group’s bankruptcy lawyers can walk you through it, explain how it works step by step, and help ensure that you leave it in a better financial position than when you entered it.

Chapter 7 Helps with Life After Bankruptcy

Once our bankruptcy lawyers have provided the legal support you need, we can also help you stay on track as you move forward into a debt-free and less stressful future. This includes providing you with direction concerning the best way to repair and improve your credit.  This also includes tips on how to determine good/constructive credit solicitations from potentially exploitative and destructive ones.  Our bankruptcy lawyers are very experienced in the practical approaches to credit recovery and they can share vital resources for ongoing financial support that would otherwise be difficult to navigate.

If you’re in a difficult financial position and are considering Chapter 7 bankruptcy or if you’re in need of legal assistance for a bankruptcy filing, the Behm Law Group can help. Contact our bankruptcy lawyers today at (507) 387-7200 or visit our website to find out more about the services we offer to Owatonna, MN residents.

Rebuilding your future after Chapter 7 bankruptcy is a journey that requires resilience, determination, and no small amount of professional expertise. Though it’s the most common type of bankruptcy, Chapter 7 bankruptcy is different for everyone. That’s why it’s essential to find a bankruptcy lawyer who will closely review your individual case and personalize your guidance. Behm Law Group wants all Mankato, MN residents to know that with the right mindset and individualized support, anyone can navigate beyond bankruptcy and on towards a brighter future.

Bankruptcy Recovery

Chapter 7 bankruptcy recovery addresses immediate financial concerns and lays the groundwork for long-term stability. It’s a chance to assess financial habits, reevaluate priorities, and make informed decisions to avoid similar pitfalls in the future. Individually speaking, your journey might begin with creating a budget, developing a savings plan, or focusing on rebuilding credit, but practically speaking, there’s a lot of paperwork and bankruptcy court filings to get through before recovery can really begin.

Chapter 7 Bankruptcy Lawyers

The Chapter 7 bankruptcy lawyers with Behm Law Group can help you handle the most overwhelming parts of the bankruptcy process. We offer guidance for everything from reviewing forms and submitting paperwork to ensuring that your assets are accounted for and protected as much as possible. You can rely on us to lead you through the entire court process and make legal decisions that will best support you going forward.

The hardest part of bankruptcy is often the tedious nature of gathering the requisite documentation. When you’re in the midst of trying to manage a new financial reality, keeping your paperwork organized can feel like half the battle. Let our bankruptcy attorneys shoulder some of the burden and walk you through what you’ll need to come out on the other side.

Rebuilding after bankruptcy isn’t just about numbers; it’s about rebuilding confidence and setting new goals. Patience and persistence are key, as recovery takes time. Mankato, MN area residents who are considering Chapter 7 bankruptcy or are in need of bankruptcy recovery support can reach out to Behm Law Group today to consult with our bankruptcy team. We’re here to help. Contact us today at (507) 387-7200 or visit our website to find out more.

Dealing with debts you can’t consistently pay off each month can be one of the most stressful situations for individuals and households to face. Whether you’ve accrued debt from your mortgage, car loan, and credit cards, or had unexpected medical expenses, job losses, and other circumstances, those financial obligations can seriously compromise your quality of life. There are ways to deal with debts outside of routine repayment, including debt relief programs, consolidation, and other types of settlement. These options might be workable for very few people in certain situations.  More often than not, however, they are very risky, slow, costly, and ineffective and will only postpone an eventual bankruptcy filing.  In fact, filing for individual consumer bankruptcy may be the most direct and reliable and permanent way to resolve debts through a government-sanctioned process. Additionally, if you are facing creditors who are threatening actions like foreclosing on your home or wage garnishment, filing for bankruptcy can quickly put a halt to those dangers. Behm Law Group, Ltd. can help you determine if filing for Chapter 7 bankruptcy in Mankato, MN and the local region is the right choice for your financial circumstances. Our attorneys will support and guide you every step of the way to find permanent debt relief through the filing of a bankruptcy case.

Chapter 7 Bankrupcty

If you are behind on debt payments, utility bills, and even medical expenses, creditors can garnish your wages by filing a lawsuit and getting a money judgment in court. Some creditors, like those to whom you owe student loans, taxes, or child support, can even garnish wages and levy on your bank accounts without court action. Generally, there are limits to how much creditors can garnish. State law regulates garnishment activities for judgment creditors, student loan collectors, tax authorities, and child support collectors.

Chapter 7 Bankruptcy helps with Debts

Through Chapter 7 bankruptcy, debts like credit card bills, medical debts, mortgages, car loans, personal loans and many other debts can all be permanently discharged. Filing for bankruptcy will also give you the benefit of the automatic stay. The automatic stay injunctive mandates of 11 U.S.C. §362 prevent your creditors from engaging in collection activities while your bankruptcy case is being processed. This means that you won’t have to continue making debt payments, that the foreclosure proceedings on your house will be stopped, and any wage garnishment activities will cease.

A general exception to the automatic stay is child support collection activity. If your child support creditors are garnishing your wages, they will generally be allowed to continue even after your bankruptcy case is filed when the automatic stay is in effect.  Secured creditors – creditors who have debts that are secured by some of your property (mortgage lenders, vehicle lenders, etc.) — can request the lifting of the automatic stay  if they believe that the property securing their debts will either greatly depreciate in value or be severely damaged during the bankruptcy process.  However, the court will only grant the request after conducting a formal hearing and only if a creditor can show “good cause”.

Summary

Filing for bankruptcy is the quickest and most effective way to stop wage garnishments and other creditor actions, but it might not be the right choice for everyone. To learn more about Chapter 7 bankruptcy in Mankato, MN and whether your overall financial condition will benefit from the process, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

Individual consumer bankruptcy cases can resolve most types of common debt for filers, including credit card debts, medical bills, mortgages, old utility bills, bounced checks, personal loans and car loans, among others. Many people are wary of resorting to bankruptcy because of the negative hit you can take to your credit when you file. The truth is, the damage to your credit can vary from a mild decrease to about a 200-point loss, depending on how high your score is before you file. If you are in the position of needing to file for bankruptcy, it’s likely that the impact on your credit score will be greatly outweighed by the benefits of the permanent discharge of your debts.  You may find that your credit profile is quite resilient.  While a bankruptcy can generally remain on your credit profile for several years, your credit score may return to the upper 600’s or even lower 700’s within twelve to eighteen months.  In addition, you will be a very attractive credit risk to many lenders due to the “Pinocchio Effect”.  Essentially, new potential lenders will see that all or most of your previous debts were discharged in the bankruptcy proceeding.  They may conclude that they no longer must compete with those pre-existing creditors to get paid by you.  To them, like in the Pinocchio story, you will have very few “strings” tying you to previous debts.  Further, they will see that you will not be able to file for bankruptcy relief again for several years.  In short, if you fail to pay them they will have several years to pursue collection remedies against you and there will be nothing that you could do about it. That is why some people file for Chapter 7 bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common kind of individual consumer bankruptcy filed in the U.S. The process of this kind of bankruptcy works to liquidate your non-exempt assets (properties) in exchange for the permanent discharge of your debts. With the guidance and legal support of Behm Law Group, Ltd., you can work through a Chapter 7 bankruptcy in Fairmont, MN and the surrounding area successfully.

Injunctive Mandates

When you file for Chapter 7 bankruptcy, the automatic stay injunctive mandates of 11 U.S.C. §362 are immediately put into place and most of your creditors are prevented from taking further collection actions against you until your bankruptcy case has concluded.  When your case has concluded the automatic stay mandates of 11 U.S.C. §362 become a collective permanent bar, under 11 U.S.C. §524, against most of your creditors from collecting on the debts that you listed in your bankruptcy case.  However, after your case has concluded certain creditors that you may have wanted to keep and certain creditors whose debts were excepted from the chapter 7 discharge will be permitted to interface with you again regarding payment of their claims.

What Debts are Discharged

Debts that would typically not be discharged because they are excepted from the general discharge provisions, as per 11 U.S.C. § 523 (Exceptions to Discharge), include so-called priority debts such as some tax debts, child support debts, debts related to alimony, debts related to criminal fines, debts related to personal injuries you may have caused while intoxicated and other non-priority debts such as student loans.  Therefore, creditors such as the Internal Revenue Service and the State of Minnesota could continue collection actions against you when your case has concluded.  Other creditors who have claims that you wanted to retain and for which you may have executed a reaffirmation agreement, also would be able to contact you regarding the ongoing payment of their claims.  Such creditors would include your mortgage lender, vehicle lender, etc. Creditors whose claims were discharged in the chapter 7 proceeding, however, will be barred from contacting you under 11 U.S.C. § 524.  They will be permanently prevented from taking legal action to collect on the discharged debts.  If they attempted to take legal action against you or pursue other activities to collect the debts, you could sue them and they could be punitively sanctioned quite severely by the bankruptcy court.

Chapter 7 Discharge Violations

There are times when creditors may violate the discharge order and pursue collection activities on the debts that were discharged in your bankruptcy case. Some examples of discharge violations could include:

• A creditor sells your debt to a debt buyer and that debt buyer contacts you to demand payment
• Your credit report still lists the discharged debt as “past due” or “delinquent”
• Some of your property is repossessed
• A creditor that may have either foreclosed on your house or repossessed your vehicle continues to pursue you for any remaining debt following the re-sale of the foreclosed home or repossessed vehicle

Essentially, any creditor action on a discharged debt is a violation of the discharge order. What’s important to understand is which of these actions are illegal violations and which are categorized as a mistake or a lack of knowledge. For example, if a debt buyer is sold your discharged debt but wasn’t notified of the bankruptcy discharge, the bankruptcy court may consider their effort to collect as an innocent mistake due to lack of knowledge.

If you are considering filing for Chapter 7 bankruptcy in Fairmont, MN or the local region, contact Behm Law Group, Ltd. today at (507) 387-7200 or email stephen@mankatobankruptcy.com for more information about the legal effects and benefits of the discharge order and the handling of different ebts.

Every year, the cost of living, retail prices, and many other aspects of our economy and lives change slightly. The same is true for the bankruptcy requirements and the bankruptcy code because the way bankruptcy works from case to case reflects household debts and household incomes. If you are considering filing for bankruptcy, you may qualify for Chapter 7 if you pass the Means Test. Chapter 7 bankruptcy is the most commonly filed individual consumer case, and it provides the most direct relief by completely discharging most debts in a very short period of time. Behm Law Group, Ltd. can help you determine if you’ll qualify for Chapter 7 or if you would benefit more from a Chapter 13 reorganization bankruptcy case. Our attorneys provide legal guidance and protection throughout your case, helping you find long-lasting debt relief in Worthington, MN and the local region.

Debt Relief

The Means Test is a bankruptcy code mathematical formula that determines your debt-to-income ratio. If your debt-to-income ratio is lower than the state average or median for a similarly-sized household, you will qualify for debt relief through Chapter 7 bankruptcy. Because the Means Test deals with debt and income levels, the numbers used for various household sizes change over time.

Since May of 2021, the Means Test numbers for household sizes in Minnesota are as follows:

Size of Household Monthly Income Annual Income
1     $5,214.50              $62,574.00
2    $6,873.58             $82,483.00
3    $8472.42              $101,669.00
4    $10,009.17          $120,110.00
5    $10,759.17           $129,110.00
6    $11,509.17            $138,110.00
7    $12,259.17            $147,110.00
8    $13,009.17           $156,110.00
9    $13,759.17            $165,110.00
10 $14,509.17            $174,110.00

These income amounts are calculated as gross income, so the actual conclusion of the Means Test doesn’t come until after your debts and other expenses are subtracted from these gross income amounts. If you have children, own a home and a car, are married, or have other common life expenses that are shared among many filers, it’s likely you will be more able to qualify and file for Chapter 7 bankruptcy even if your income is on the higher end.

Means Test

Due to lower costs of living and fewer expenses, single filers or households of just two people typically have a harder time passing the Means Test. If you fail the Means Test, you’ll still be able to file a Chapter 13 case. Chapter 13 reorganizes your debts into a manageable three (3) to five (5) year repayment plan that is tailored to your monthly income and your monthly reasonable and necessary living expenses. Your unsecured creditors are only partially paid – usually anywhere from 10% to 30% (depending on the level of your monthly household income) — and your secured debts are usually repaid under more favorable terms than you had before your bankruptcy case was filed.

To learn more about the Means Test and using individual consumer bankruptcy for permanent debt relief in Worthington, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

There are many ways to resolve debts that you would otherwise never be able to repay, but the fastest and permanent way is through bankruptcy. Depending on the type of bankruptcy you file, your case could be processed as quickly as three to four months. In comparison, debt relief programs can take up to two to four years to handle your case, are rarely successful, and, in the few cases that are successful, can greatly increase the costs and the amount of time it takes to repay your debts by up to five years. Individuals can file a Chapter 7 case, which permanently discharges debts in exchange for the  liquidation of non-exempt assets, or a Chapter 13 case, which reorganizes debts into a manageable repayment plan lasting three to five years where you pay only a portion of your debts at no interest, late penalties or fees.  If you’re considering filing for Chapter 13 or Chapter 7 bankruptcy in Owatonna, MN or the surrounding area, Behm Law Group, Ltd. can provide comprehensive legal support and protection throughout your case.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common kind of individual consumer case. However, it does require filers to pass the Means Test in order to qualify. The Means Test measures your debt-to-income ratio. If that ratio is lower than the state median or average income for a similarly sized household, you’ll be eligible for a Chapter 7 case.

Steps in Chapter 7 Filing

There are many steps to a Chapter 7 case, including pre-bankruptcy requirements, paperwork, and the meeting of creditors, but when the necessary, sensible and understandable steps are completed, the bankruptcy court will grant a permanent discharge of most of your debts.

Discharge of Debts

Once the bankruptcy court approves the discharge of your debts, the bankruptcy court will issue a discharge order and a “discharge letter” will be mailed to your creditors and to you, officially and permanently ending your legal responsibility to repay all discharged debts. This order will wipe out all qualifying debts, including credit card, utility, medical, and personal debts. The discharge letter/order is typically sent 60 days after your meeting of creditors.

Exemption Claims

If you have properly asserted exemption claims regarding your property, your case will be fully closed and you will be able to move past your bankruptcy and move forward to a better and brighter future with much less stress.  In the majority of cases, people can assert exemption claims as to all their property items.  In most cases, people do not lose any property.

Trustee Final Report

Your case is closed when the trustee files their final report. This report and the final decree of the court usually closes your case for good.  However, bankruptcy cases can be reopened for various reasons.  For instance, if a creditor you listed in your bankruptcy case is still bothering you for repayment of its debt, you can reopen your bankruptcy case to initiate a lawsuit against that creditor and ask the bankruptcy court to punitively sanction the creditor.  Also, if you forgot about an asset and did not disclose the asset in your initial bankruptcy paperwork, you could reopen your bankruptcy case to amend your bankruptcy schedules to list the asset.

Summary

To learn more about filing for Chapter 7 bankruptcy in Owatonna, MN and how cases are finalized, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

At Behm Law Group, Ltd., we’ve worked with clients in all kinds of situations filing for Chapter 7, 12, and 13 bankruptcies. The process of Chapter 7 is called “liquidation bankruptcy”.  Essentially, people who file for chapter 7 bankruptcy relief have their non-exempt properties sold and the value is distributed to their creditors. The debts tied to or secured by vehicles and houses and other assets are discharged.  However, in such cases, the properties tied to or secured by those debts are generally not retained by the person filing for bankruptcy relief.   Unsecured debts (credit card debt and medical bills, for example) are also discharged. Filers can also use bankruptcy exemptions to protect the properties they want to keep from liquidation. If you are considering filing for Chapter 7 bankruptcy in Jackson, MN or the surrounding areas, Behm attorneys can protect and guide you throughout the process.

Chapter 7 Bankruptcy

In addition to its impact on the filer’s credit, one of the main reasons people balk at filing a bankruptcy case to resolve their debt is the fear of losing property. The truth is that most filers lose very little property if they qualify for a Chapter 7 bankruptcy in the first place.  Losing property in chapter 7 bankruptcy is generally not something that happens in every case.  In fact, in most cases, all people lose are their debts.  The bankruptcy exemptions that people can claim to protect their important assets such as homes, cars, appliances, and tools of their trade, and other things are quite generous.

Exemptions

It is important to note, however, that bankruptcy exemptions only protect equity that someone has in an asset or property.  Bankruptcy exemptions do not eliminate secured mortgages or validly perfected vehicle liens.  There may be an asset that you have that is secured by or subject to a mortgage or lien that you want to continue working with the creditor to retain.  You may have equity or value in that asset that exceeds the debt against it.  In chapter 7 bankruptcy, people retain such debts by signing a reaffirmation agreement.  A reaffirmation agreement is a legal document that you and the subject creditor sign that recites and memorializes the terms and conditions of the original mortgage loan or vehicle loan that you negotiated with the subject creditor.  It is entirely voluntary on your part and on the creditor’s part.  No one can force you to do a reaffirmation agreement.

Presume, for instance, that you own a house that is worth $300,000.  Presume further that you owe your mortgage lender $200,000 and that you, therefore, have $100,000 worth of equity or value in the house.  You would protect the $100,000 equity or value with your homestead exemption.   The exemption you claim, however, does not make the $200,000 mortgage go away.  If you want to retain the house and the $100,000 equity or value that you have in the house, you must still pay the underlying mortgage.  To do this, you and your attorney would sign a reaffirmation agreement concerning the $200,000 mortgage with the subject creditor.  After your bankruptcy concluded, that mortgage debt would survive and your relationship with the creditor would essentially be the same as it was before you filed bankruptcy.  As long as you made your mortgage payments after the conclusion of your case, the creditor would continue sending you monthly billing statements and it would continue allowing you online account privileges.  The creditor also would continue reporting your timely mortgage payments to the three big credit reporting agencies:  Equifax, Experian and Transunion.  This would help rehabilitate and restore your credit profile.

 Court Approval

Once you’ve negotiated the reaffirmation with your creditor, the bankruptcy court must approve it.  To approve a reaffirmation agreement the court looks at various factors such as whether the terms are fair to all involved parties. The court also looks at the value of your property, your income, changes to your expenses, the monthly debt payment requirement, your on-time payment history, and whether you’re current with your mortgage payments. In most cases, the bankruptcy court will approve a reaffirmation agreement unless the terms are obviously unfair to one of the parties involved.

While most reaffirmation agreements are approved by the bankruptcy court the reaffirmation process is not routine and it can become complicated, both during creditor negotiations and with respect to the review by the court. It is essential that you have an experienced lawyer assist you with a reaffirmation agreement in your Chapter 7 bankruptcy in Jackson, MN or the neighboring regions. Contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com to get started with expert guidance in your case.